We all have different reasons for saving, and the purpose of your investment can affect how much risk you’re prepared to take with your money. If, for instance, your long-term plan is to pay for your children’s education, then you may have to invest for a long period of time and look for higher returns investments in Nigeria.
Now, keeping your money in a bank or back pocket instead of investing it, will not work for you. To make smart savings and investments decisions, you need to:
1. Start saving early
The earlier you start saving and investing, the more you can make use of the power of compounding to make your savings grow exponentially.
For Example: If you retire at the age of 55, and start investing at the age of 25, your investment period would be 30 years. Suppose if you start investing N20,000 monthly from the age of 25, your investments will grow up to about N7,200,000 by the time you retire.
And if you start investing at the age of 35, your investment period would be 20 years. Even at that, in 20 years, your investments would have grown up to N4,800,000.
2. Invest in Yourself
Everyone is good at something. If you are lucky to have your hobby as your job, then investing in it will enhance your knowledge and skills. There is no better investment than this.
The more you invest in your skills and knowledge, the faster your growth. This is because you will be able to create more value for yourself, employer, and end users.
3. Save with the right goal
Why are you even saving at all? The more meaningful your goal is, the more motivated you would be to work hard. Establishing what your savings and investments goals are with help you achieve them fast.
Of course, you can save with the goal of starting a business even if you haven’t decided what business to go into. Out of your savings and investments, you will be to lay foundations of your business.
4. Avoid all the expenses that are linked to your social status
Now, this is a big one. So many people would rather lavish money on a lot of things, not because doing that brings them happiness, but because it helps them in projecting a certain social status.
This is a huge mistake and waste of resources unless that helps you bring more money to the table. If you are a celebrity, this might make some sense, but otherwise, it does not.
5. Save first, spend later
In order to be disciplined about saving, it is never a bad idea to keep separate accounts for saving and expenditure. Start by transferring a pre-determined amount to another account meant for savings. Allow yourself to spend only from your expenditure account. If, for some reasons, you exhaust your expenditure account, look for ways to spend until your next salary. This is definitely a great way to save.
Don’t focus on the latest savings and investments fad in Nigeria. Design your own investment method with a high probability of achieving your long-term investment objectives.
Did you find these tips helpful? Share your thoughts!